Quest Diagnostics Reports Fourth Quarter And Full Year 2015 Financial Results; Provides Guidance For Full Year 2016; Increases Dividend 5% To $0.40 Per Quarter
MADISON, N.J., Jan. 28, 2016 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today that for the fourth quarter ended December 31, 2015, adjusted income from continuing operations was $157 million, essentially unchanged from 2014. Adjusted diluted EPS excluding amortization was $1.19 in the fourth quarter of 2015, compared to $1.18 in 2014.
For the fourth quarter of 2015, reported income from continuing operations was $188 million, or $1.29 per diluted share. Reported income from continuing operations in the fourth quarter of 2015 benefitted from the recognition of deferred tax benefits totaling $58 million, or $0.40 per diluted share. This benefit was partially offset by $27 million after tax, or $0.19 per diluted share, of charges primarily related to restructuring and integration costs and ongoing efforts to drive operational excellence. In the fourth quarter of 2014, reported income from continuing operations was $185 million, or $1.26 per diluted share. Reported income from continuing operations in the fourth quarter of 2014 benefited from the favorable resolution of tax contingencies of $44 million, or $0.30 per diluted share. This benefit was partially offset by $17 million after tax, or $0.12 per diluted share, of charges primarily related to restructuring and integration costs and ongoing efforts to drive operational excellence.
Fourth quarter 2015 revenues were $1.85 billion. Revenues grew 0.6% versus the prior year on an equivalent basis, which excludes the fourth quarter 2014 revenues of the clinical trials testing business contributed to the Q2 Solutions joint venture in July 2015. On a reported basis, revenues were lower by 1.8% compared to a year ago. Diagnostic information services revenues grew by 0.4% versus the prior year. Volume, measured by the number of requisitions, grew by 0.3% versus the prior year and revenue per requisition increased by 0.1%.
For the fourth quarter of 2015, adjusted operating income from continuing operations grew to $288 million, or 15.5% of revenues, compared to $283 million, or 15.0% of revenues, a year ago. For the fourth quarter of 2015, reported operating income from continuing operations was $239 million, or 12.9% of revenues, compared to $257 million, or 13.7% of revenues a year ago. Reported cash provided by operations was $271 million.
"We finished 2015 with a solid quarter, delivering both revenue and earnings growth. For the year, we increased adjusted operating income by 7.5% as a result of our return to growth and our operational excellence program," said Steve Rusckowski, President and CEO. "Looking ahead to 2016, the growth we are projecting is based on continued execution of our five point strategy, which includes two recently announced hospital opportunities and the launch of our Data Diagnostics solution with Inovalon."
Full Year 2015 Performance
Revenues for 2015 were $7.5 billion, an increase of 2% on an equivalent basis. On a reported basis, revenues grew by 0.8% compared to a year ago.
Adjusted diluted EPS excluding amortization was $4.77 for 2015 and grew 6% compared to 2014. Reported income from continuing operations for 2015 was $709 million, or $4.87 per diluted share, compared to $551 million, or $3.78 per diluted share, in 2014. Reported income from continuing operations in 2015 benefitted from the net gain on the contribution to the clinical trials joint venture and recognition of deferred tax benefits which were partially offset by restructuring and integration charges as well as debt refinancing and other charges.
Adjusted operating income from continuing operations for 2015 grew 7.5% to $1.2 billion, or 16.1% of revenues, compared to $1.1 billion, or 15.0% of revenues, for 2014. On a reported basis, operating income from continuing operations was $1.4 billion, or 18.7% of revenues, compared to $983 million, or 13.2% of revenues, in 2014. Reported operating income from continuing operations in 2015 benefitted from the gain on the contribution to the clinical trials joint venture.
Adjusted cash provided by operations was $899 million for 2015. Reported cash provided by operations for 2015 was $810 million and was negatively impacted by after tax cash charges associated with the company's debt refinancing. Capital expenditures for 2015 were $263 million.
Dividend Increased
Quest Diagnostics' Board of Directors authorized a 5% increase in its quarterly dividend from $0.38 to $0.40 per share, or $1.60 per share annually, payable on April 20, 2016, to shareholders of record of Quest Diagnostics common stock on April 6, 2016. The increase is the company's fifth dividend increase since 2011.
Outlook for Full Year 2016
For 2016, the company estimates results before special items as follows:
- Revenues to be between $7.52 billion and $7.59 billion, an increase of 1.5% to 2.5% over 2015 revenues on an equivalent basis.
- As part of the company's strategy to refocus on diagnostic information services, the company contributed its clinical trials testing business to the Q2 Solutions joint venture in July 2015. Revenues on an equivalent basis for full year 2015 are $7.41 billion and represent the reported revenues excluding 2015 clinical trials revenue totaling $85 million.
- Adjusted diluted EPS excluding amortization expense to be between $5.02 and $5.17.
- Cash provided by operations to approximate $1 billion.
- Capital expenditures to be between $250 million and $300 million.
Note on Non-GAAP Financial Measures
As used in this press release: (i) for the purpose of income measures the term "adjusted" refers to operating performance measures that exclude special items such as gain on the contribution to the clinical trials joint venture, charges on retirement of debt and related refinancing charges, restructuring and integration charges, recognition of certain income tax benefits, charges in equity earnings in equity method investees and other items; (ii) the term "adjusted diluted EPS excluding amortization expense" represents the company's results before the impact of special items and amortization expense; (iii) the term "adjusted cash provided by operations" represents cash provided by operations before the cash impact of charges on retirement of debt; (iv) reference to "revenues on an equivalent basis" when comparing 2015 results to 2014 results represents 2014 reported revenues excluding clinical trials revenues reported in the third and fourth quarters of 2014; and (v) reference to "revenues on an equivalent basis" in the Outlook for Full Year 2016 section represents 2015 reported revenues excluding clinical trials revenues for 2015. Adjusted measures are presented because management believes those measures are useful adjuncts to reported results under accounting principles generally accepted in the United States. Adjusted measures should not be considered as an alternative to the corresponding measures determined under accounting principles generally accepted in the United States. The attached tables include reconciliations of adjusted measures to measures reported under accounting principles generally accepted in the United States.
Conference Call Information
Quest Diagnostics will hold its quarterly conference call to discuss financial results beginning at 8:30 a.m. Eastern Time today.
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